When you become an employer, you add a lot of things to your plate, like running payroll. One of your employer responsibilities with payroll is withholding certain taxes, such as SUTA tax. But, what is SUTA tax?
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- What is SUTA tax?
- How much is SUTA tax?
- Do you pay SUTA tax on the employee’s total wages?
- SUTA tax example
- How to apply for a SUTA account
- How to pay SUTA tax to your state
- Let Patriot Software deposit and report your SUTA tax
What is SUTA tax?
SUTA tax is a state payroll tax employers pay to fund unemployment benefits for displaced workers. SUTA stands for the State Unemployment Tax Act.
States might also refer to SUTA tax as the following:
- State unemployment insurance
- SUI tax
- Reemployment tax (e.g., Florida)
Who pays SUTA tax? In most states, SUTA or SUI is an employer-only tax. However, employees in Alaska, New Jersey, and Pennsylvania must also pay SUI tax. If you have employees in any of these three states, pay the employer portion and withhold SUTA tax from their wages. Remit both contributions to the state.
Some states might exempt certain businesses from paying SUTA tax. For example, a state might exempt nonprofit organizations and businesses with few employees from paying state unemployment taxes.
SUTA tax works alongside FUTA tax, which is a federal payroll tax employers pay to fund unemployment benefits. You are responsible for paying both types of unemployment tax.
How much is SUTA tax?
SUTA rates vary state to state. Each state typically has a range of SUTA rates that may fall anywhere between 0% to over 10%.
You might be wondering What is my SUTA tax rate? When you register as an employer, your state will generally tell you what your SUTA tax rate is.
Many states give new employers a standard new employer SUTA rate. The new employer SUI rate is different in each state. Once you gain more experience as an employer, your state will assign you a new rate.
States might also base rates on your industry, like construction and non-construction industries. Construction industries typically have a higher SUTA rate than non-construction industries.
If you live in a state that doesn’t assign a standard new employer rate, you need to wait for your state to assign yours.
New employers can follow the steps below to get a SUTA rate:
- Sign up for a SUTA tax account with your state
- Receive new employer contribution rate from the state
- Get updated SUTA rate from your state
Do you pay SUTA tax on the employee’s total wages?
No. Each state sets its own SUTA tax wage base. A taxable wage base, or threshold, is the maximum amount of an employee’s income that can be taxed.
The SUTA wage base is the same for all employers in the state. For example, the wage base for Alabama employers is $8,000 for 2025. This means Alabama employers must pay the tax on an employee’s wages until they earn $8,000.
Each state’s wage base is subject to change each year. Stay up-to-date with your SUTA wage base to ensure you’re withholding the correct amount of SUTA tax for each employee.
SUTA tax example
Say you’re a new employer in Arizona. You run a non-construction business. The new employer rate in Arizona for 2025 is 2.0%.
Arizona’s SUTA wage base for 2025 is $8,000. This means you must pay up to $160.00 in SUTA taxes per employee (0.02 x $8,000).
How to apply for a SUTA account
Are you a new employer? Great (and congrats!). It’s time for employer registration. Check your state’s website to apply for your state unemployment tax account.
Each state’s signup process varies. In most cases, you can apply online directly through your state’s website.
Check out our new employer information by state for more details. You can also consult your state for more information about how to apply for a SUTA account.
How to pay SUTA tax to your state
You’re responsible for reporting your SUTA tax liability to your state and making payments. In most cases, you need to make quarterly SUTA payments to your state.
Fill out your state’s return that reports employee wages to the state unemployment tax office. You may need additional information to fill out this return, such as your employees’ SOC codes.
Many states give employers an option to file and pay their state unemployment taxes online. Check with your state about whether or not you can pay your SUTA tax liability electronically. And, be sure to contact your state for more details about depositing and reporting your SUTA tax liabilities.
Let Patriot Software deposit and report your SUTA tax
Looking for an efficient way to track your SUTA tax liabilities? Patriot’s Full Service payroll services will do the SUTA tax legwork for you.
Simply enter your company’s SUTA rate from your state in the software to get started. From there, we’ll collect, file, and remit your SUTA tax to the state alongside your other federal, state, and local payroll taxes.
Get started with your free trial today!
This article has been updated from its original publication date of March 17, 2015.
This is not intended as legal advice; for more information, please click here.
